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Banks — yes, folks, banks! — rescued the stock market yesterday. In the early going, it looked as if gloomy headlines out of Europe and a couple of downbeat Christmas sales reports from U.S. retailers were going to throw cold water on Wall Street’s January festivities. But then came a rumor that President Obama may be readying a blockbuster refi program for underwater homeowners.

Presto, bank stocks zoomed, dragging along most other sectors of the market for the ride. At the closing bell, all the headline indexes except the Dow had swung into the green.

Only time will tell whether there’s any substance to the refi rumor. (The White House denied it this evening, but you never know what the president may be discussing behind closed doors.) If a proposal of this sort eventually sees the light of day, it could give the market an important psychological boost.

However, we can’t just assume that President Obama is about to sprinkle magic fairy dust and cure the housing depression. We have to go on the evidence we have — and on that basis, it appears the market’s rally off the October lows is growing long in the tooth.

Without exception, my intermediate-term technical indicators (those that foreshadow market trends two to six months out) testify that the post-October advance is gradually losing strength. For example, the S&P reached its maximum positive spread over its 50-day moving average on Oct. 27, at 8.5%.

At yesterday’s close, the index stood only 3.3% above its 50-day average price. So whatever else may be happening, the market isn’t accelerating to the upside.

In fact, despite the bullish hoopla in recent days, the S&P still hasn’t closed above its Oct. 28 recovery peak of 1285. Even if the index touches a new recovery high in the next few sessions, the “breakout” will have taken a long time coming — another technical yellow flag.

All in all, I’m more inclined to sell into strength here than to do much new buying. For example, I’m planning to sell SPDR S&P MidCap 400 ETF (NYSE:MDY) if MDY hits $165.

But, if you’ve got fresh cash to put to work, I suggest tucking it into short-term bond funds like:

What about hedging via double-short ETFs like ProShares UltraShort S&P 500 Fund (NYSE:SDS)? It still seems a little early for that. But if the S&P crosses 1,300, you may get a chance.

P.S. Speculators, if you own Bank of America (NYSE:BAC), I’m sure you’re grateful for yesterday’s 8.6% bounce in the stock. However, I wouldn’t chase it here. Indeed, I’m lowering my buy limit to $6, reflecting the likelihood BAC will have to issue additional common shares to meet toughened (Basel III) regulatory-capital standards.